On 28 February 2018, the Financial Secretary for Hong Kong, Paul Chan Mo-po delivered his budget policy address, unveiling plans for the city in the upcoming fiscal year. Following on from Carrie Lam’s maiden policy address last year, a “new fiscal philosophy” has been promised for the city, including reductions to salaries and profits tax.
Salaries tax will be reduced by 75%, subject to a ceiling of HKD 30,000 for the year of assessment 2017-2018. In addition to this one-off tax reduction, it has been proposed that the tax bands are widened for salaries tax from the current HKD 45,000 to HKD 50,000 and increase the number of tax bands from four to five. Marginal rates for these bands will be modified to 2%, 6%, 10%, 14%, and 17% respectively.
1.34 million taxpayers will have their tax burdens reduced as a result, decreasing tax revenue by HKD 4.09 billion a year.
Profits tax for businesses will also see one-off reductions of 75%, subject to a HKD 30,000 ceiling for financial year of assessment 2017-2018. 1.8 million taxpayers will benefit from this cut and adjustment to allowances.
For more information on how these reductions may affect you, please contact your local account manager or Karen Cheung.
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